The IMF has updated its outlook. Germany will be just above zero. On the contrary, Russia will grow, sanctions have failed – FAEI.cz

Let’s start nicely with the Czech Republic. It is the most important for us. The IMF again worsened the outlook for the Czech Republic. While in October he expected growth of 2.3 percent, in November he expected only 1.2 percent and now comes with growth of 0.7 percent.

Some will say that it’s still a pretty picture, because when you consider that we’re down 0.4 percent in 2023, that’s an improvement. But I think this is praise at any cost.

It is interesting that the Czech Ministry of Finance expects growth of 1.4 percent this year, to grow by 2.6 percent the following year. That’s weird. There is usually not such a big difference between institutions. The question is entirely raised whether it is not because the elections are approaching and the economy needs to be presented in a better light. We can’t answer that question today, but we’ll see in a few months. I personally expect lower growth.

In any case, good numbers upload to politicians. If the economy were to grow faster, we would meet a number of parameters, such as the so-called Maastricht criteria, which will enable the adoption of the euro, which many government parties are calling for.

In any case, we are expected to have the weakest growth of the entire group of V4 countries. The fund assumes that Slovakia’s gross domestic product (GDP) will increase by 2.1 percent this year. Growth should be 2.2 percent in Hungary and even 3.1 percent in Poland. This signals that we will experience another wasted year in the Czech Republic. We probably won’t get to the result before covid this year either.

Germany and France lose their breath

The IMF estimates that the situation of Europe’s largest economy will worsen. Germany is said to grow the least of all developed economies. Here, too, the gradual worsening of the prognosis can be seen. In January they claimed that the economy would grow by 0.5 percent, now they expect only 0.2 percent.

At the same time, the problems are clear. The economy is suffering due to demographic reasons. It has a labor shortage, and it also has problems with the transformation to a green industry. These problems are also elsewhere, so France will slow down from one percent to 0.7 percent against the original forecast.

At the same time, the IMF could reduce the estimate again, because it is already warning Europe about the potential breakdown of supply chains. This always leads to lower production and higher price.

Sanctions on Russia are obviously not working

The IMF also published expectations for the development of the Russian economy. Here, most people are probably expecting a drop, because they remember how they told us two years ago that a disaster would occur in Russia after SWIFT was abandoned. But nothing like that happened. By the way, also because SWIFT never fully left Russia.

According to the data, Russia is growing the fastest among the economies designated by the IMF as advanced economies. Unlike Central Europe, here the IMF is gradually improving the outlook. In January, Russia expected growth of 2.6 percent, and in April it expected growth of 3.2 percent. A slowdown to 1.8 percent is expected in 2025. But this is still such a high growth that we may not even give it.

It turns out that Rudek’s economy has quickly and effectively turned into a war economy. He can handle sanctions easily. She is suddenly more self-sufficient. At the same time, domestic consumption did not change much, as did domestic investment. There is obviously something wrong with the sanctions. It is either necessary to harden them or leave them. The current state is a cat-dog.

The author is the Chief Economist of the Comfort Finance Group
(Editorially modified)